Prenda Law is a "copyright troll" that sued thousands for supposedly illegal downloads of porn movies before coming to a halt last year when its methods drew sanctions from several federal judges. Many of those sanctions are now on appeal.

New data was made public this week about the financial condition of John Steele, the Miami attorney who has been at the center of the scandal. The data was made public by Steele himself, who is fighting off his most recent slapdown: a $261,000 sanction from an Illinois federal judge who wrote that the lawsuit Prenda filed "smacked of bullying pretense."

Steele and two other Prenda-linked attorneys said they didn't have the money to pay. US District Judge David Herndon asked to see financial documentation proving their poverty. When he saw it, he was unimpressed. Steele and his former partner Paul Hansmeier "submitted incomplete, and to say the least suspicious, statements of financial condition," wrote Herndon. He ordered them to pay the sanctions plus another 10 percent for the delay.

Now Hansmeier and Steele have appealed Herndon's order. They've also ponied up some cash, posting a bond for $287,300, which would cover the entire sanction, plus interest, through April. Defense attorneys wanted the bond payment to be higher, but the sum mollified Herndon, who allowed Hansmeier and Steele to put the payment on hold while his order was appealed. "[P]laintiff’s counsel has clearly made a good faith effort to comply with the Contempt Order," wrote the judge.

Prenda: An “early pioneer in catching thieves”

That resolution should have resulted in a quiet period in this case, with at least several months' delay as the parties await their turn at the US Court of Appeals for the 7th Circuit. But it hasn't.

Herndon is still considering a separate motion for contempt based on what Steele and Hansmeier said in court. On Monday, Steele filed a response on that issue, and it's quite revealing.

Steele used the same combative tone he has struck before. Longtime Prenda-watcher Mike Masnick, who first published Steele's motion yesterday, wrote: "John Steele really loves the 'I know you are but what am I' form of legal argument, in which whatever he's accused of, he aggressively accuses his accuser of being guilty of the same."

The pile of documents about Steele's financial condition was submitted under seal. But Steele's own motion shows the outlines of the millions he is suspected to have earned from porn lawsuits. The selective disclosures-slash-denials all serve to make the point that he wasn't able to pay $261,000 in November 2013. (An interesting argument to make six months later, when he and his colleagues just paid for a bond of more than $280,000.)

Steele started off with an explanation of how Prenda came to be:

Steele and his partner, Paul Hansmeier (”Hansmeier”) were early pioneers in catching thieves and hackers who engaged in stealing copyrighted works and other computer related misdeeds, including computer hacking and copyright infringement. From 2010 until November 2011, Steele Hansmeier PLLC, represented various copyright holders in suits against individuals they had obtained evidence against using the same methods that the FBI utilizes to catch pirates and hackers. In November 2012, Steele and Hansmeier transferred its book of clients to a new law firm named Prenda Law, Inc. recently created by Paul Duffy. Mr. Duffy is an Illinois attorney who had known Steele for several years.

He went on to list several of the evidence points used against him—and actually agreed with them. But none of it "support[s] the proposition that Steele could have personally paid $261,000 in November 2013."

For instance, defense lawyers noted that Steele made $900,000 in 2011. "This is completely true," wrote Steele. "In fact, Steele believes he earned slightly more than that in 2011," but that has nothing to do with what he could pay in 2013.

Second, Steele at one point received $2.17 million and quickly distributed portions of it to other bank accounts. "The money in question resulted from Steele's deceased father's estate, which had recently sold a company owned by Steele's father for over 20 years," he wrote. The money was split between Steele and two siblings, with Steele receiving one-third. (The timing of these transactions is not specified.)

Third, Steele admitted that Steele Hansmeier, Prenda Law, and Prenda-linked shell Livewire Holdings received a total of $4.4 million in settlement payments. But he said the payments to Steele Hansmeier were all properly accounted for in his tax returns, and the payments to Prenda and Livewire don't matter because he denies owning those entities. (In an interview with Ars last year, Steele did say he is paid a "modest flat sum" each month as a part-time employee of Livewire.)

Steele also admitted to other points that came up in the sparring over his finances. Again, he didn't rebut them; he simply called them irrelevant. For instance, he subscribed to a website called Sovereign Man that advises readers on how to stash cash abroad. ("Learn how to diversify your life and assets geographically so that no government has power over you," the site suggests.) Response: "Steele is aware of no case law that makes it illegal for someone to sign up for emails from the Sovereign Man website."

He moved money between many bank accounts. Response: "Steele could have opened 1000 bank accounts in the same day, and his position is that such acts are perfectly legal."

Steele had an account on a secure e-mail service called Countermail. Response: "This was done largely because of Booth and the type of clients that Booth represents. Steele has been the subject of multiple identity theft attempts, and numerous attempts by hackers and pirates to steal personal information... Steele asserts that he has an absolute right to use any e-mail provider he chooses."

The defense lawyer in this case, Jason Sweet, isn't letting up. He has piled on a third request for sanctions, insisting that Steele continues to stymie his legitimate requests for information.

Hansmeier, Steele, and Paul Duffy "have engaged in a massive effort to hide, move, and transfer their assets in order to avoid complying with numerous sanctions orders and judgments levied against them," wrote Sweet. "There have been warnings. There have been orders. There have been directions on the record. Yet, Plaintiff’s Counsel continues to engage in dilatory tactics and dilettante arguments."

I'm normally appalled at the level of incarceration in the US and the ridiculous terms set for trivial crimes, but these racketeers need a good long while in a jail cell. It beggars belief that they managed to bullshit their way out of more serious sanctions for so long.

Stripping them of all their ill-gotten assets isn't going to happen while they are at liberty to squirrel them away in a myriad of locations. Lock 'em up!

His non-denial denials are starting to get ridiculous. "So I carried a heavy bag into a plane. It's not illegal to fly to Barbados with a heavy bag. So I left the bag in my prepaid safety deposit box in Barbados. You can't prove what was in the bag. Its just a valuable bag that I don't want to lose. It's not illegal to misplace a few million in cash either."

I await the IRS auditors who can get into those foreign accounts and hoist via petards. Until then this whole drama is only going to make popcorn sales increase.

After all the subterfuge,After all the shell companies,After all the extortionist tactics,After all the obfuscations,After all the evasive answers,After all the sanctions,After all the contempt findings,After all the judicial smackdowns,After all the (admittedly unproven but extremely suspicious) ties to the original seeding of the very file they were suing over to the principal owners of the company doing the suing,After all the procedural violations in violating judicial orders,After all the mockery of the judicial system that they have been the main source of,

How in the WORLD can they still have a license to practice law in anything but a remote third world country? (and admittedly even that would be a stretch)

After all the subterfuge,After all the shell companies,After all the extortionist tactics,After all the obfuscations,After all the evasive answers,After all the sanctions,After all the contempt findings,After all the judicial smackdowns,After all the (admittedly unproven but extremely suspicious) ties to the original seeding of the very file they were suing over to the principal owners of the company doing the suing,After all the procedural violations in violating judicial orders,After all the mockery of the judicial system that they have been the main source of,

How in the WORLD can they still have a license to practice law in anything but a remote third world country? (and admittedly even that would be a stretch)

State Bars' average time from filing of complaint to imposition of public sanction (in 2011):

Massachusetts: 646 daysMinnesota: 29 monthsCalifornia: Not available (474 from receipt of complaint to filing of formal charges)Illinois: Not available

«The court set the tone for the decision by opening with the following quote from a U.S. copyright case:»

"the rise of so-called 'copyright trolls' - plaintiffs who file multitudes of lawsuits solely to extort quick settlements - requires courts to ensure that the litigation process and their scarce resources are not being abused."

"... given the cap on liability and the increased legal costs the court involvement will create (not to mention paying legal fees for the ISP), it calls into question whether copyright trolling litigation is economically viable in Canada. The federal court was clearly anxious to discourage such tactics and its safeguards certainly make such actions less likely."

The IRS has no sense of humor whatsoever when it comes to the kind of side stepping double talk Steele does in court. They will just keep digging deeper and deeper. I actually hope he tries it with them...

Steele also admitted to other points that came up in the sparring over his finances. Again, he didn't rebut them; he simply called them irrelevant. For instance, he subscribed to a website called Sovereign Man that advises readers on how to stash cash abroad. ("Learn how to diversify your life and assets geographically so that no government has power over you," the site suggests.) Response: "Steele is aware of no case law that makes it illegal for someone to sign up for emails from the Sovereign Man website."

He moved money between many bank accounts. Response: "Steele could have opened 1000 bank accounts in the same day, and his position is that such acts are perfectly legal."

Steele had an account on a secure e-mail service called Countermail. Response: "This was done largely because of Booth and the type of clients that Booth represents. Steele has been the subject of multiple identity theft attempts, and numerous attempts by hackers and pirates to steal personal information... Steele asserts that he has an absolute right to use any e-mail provider he chooses."

Amazing. He can make me disagree with statements with which I would normally agree wholeheartedly.

Yah know. I hate these people as much as anyone else. I usually am not one for internet mob mentality when it comes to hating people. However there are a few select cases where the social punishment fits the crime. Prenda, Ocean Marketing \ Paul Christoforo, and the like who really are not only dicks, but dicks who like twisting the knife really do deserve to be raked over the coals. I have no issues at pointing, laughing, and wanting to see a movie out of this. (where they get no profits off of it.) Because you know, I think everyone likes seeing people getting their comeuppance in a world where its too uncommon. Its not a matter of hate but: how about the freaking justice in this world from time to time? Where's my Batman?

After all the subterfuge,After all the shell companies,After all the extortionist tactics,After all the obfuscations,After all the evasive answers,After all the sanctions,After all the contempt findings,After all the judicial smackdowns,After all the (admittedly unproven but extremely suspicious) ties to the original seeding of the very file they were suing over to the principal owners of the company doing the suing,After all the procedural violations in violating judicial orders,After all the mockery of the judicial system that they have been the main source of,

How in the WORLD can they still have a license to practice law in anything but a remote third world country? (and admittedly even that would be a stretch)

State Bars' average time from filing of complaint to imposition of public sanction (in 2011):

Massachusetts: 646 daysMinnesota: 29 monthsCalifornia: Not available (474 from receipt of complaint to filing of formal charges)Illinois: Not available

Simple they surrendered their bars in every state where they are facing legal problems. You can not file misconduct charges with the bar against a lawyer who is no longer part of the bar.

Great to see that Prenda twat get kicked in the face, repeatedly, fucking scumbag. I hope he gets locked up forever. And yeah, hard to see how they can still be allowed to practice law with all those stacked up claims against them.

The date is significant because they were asked to provide financial statements to the court by a CPA well after this date. So while Steele is pleading poverty to the court he is sparing no expense to renovate his home.

I wonder what the Judge would think of Steele's plea of poverty while he is adding a pool, spa, and deck to his home.

Impatience is understandable, but I'm inclined to let this play out. We so rarely get to see a high profile judicial smackdown of bar-licensed parasites; it would be unfortunate to interrupt the milling process before they have been completely ground into paste.

Sorry no Batman.There is however a group of superheros who exposed all of this crap from the get go, followed the leads, wrote the stories, tried to get attention. Then like all good superheroes we turned it over to the authorities to take care of.And they promptly turned it into the multistate, multijurisdictional dog and pony show you see before you.

We're heroes not vigilantes.

Even ass hats deserve their day in court, trust me I'd love to throw them in a hole and forget about them but that would be wrong.Besides there is still the tiny matter of them pressing license plates to raise money to repay every Doe they every shook down. You all know about the ones dragged into courts, but what about the names from dismissed cases that they kept? Those people they sent threatening letters to demanding payments or else... The rabbit hole is so very deep, we might never reach bottom.

And never forget there are others out there doing the same thing, just trying to keep just below the staggering level Prenda achieved... but we see them, we report on them, and they too will have their day with the authorities.

Am I the only one who thinks that poverty should not be a defense against fines or sanctions? At least not if you had significant income in the recent past. I don't care how much of your money you managed to conveniently misplace just before the hammer fell, you still owe $X to the court. If you don't have any money at the moment, we'll be more than happy to garnish your wages for the rest of your life.

Am I the only one who thinks that poverty should not be a defense against fines or sanctions? At least not if you had significant income in the recent past. I don't care how much of your money you managed to conveniently misplace just before the hammer fell, you still owe $X to the court. If you don't have any money at the moment, we'll be more than happy to garnish your wages for the rest of your life.

Prenda isn't pleading poverty as a defense to the underlying sanction. Rather, the Defendant is seeking to have Prenda held in contempt for failing to pay the underlying sanction within 14 days, as required by the sanction order. Prenda is pleading poverty as a defense to the contempt charge.